Challenges ahead

Of late, Oman’s cement producers face certain challenges, mainly on the operational side in view of the recent cost escalations including the natural gas price hike, the report noted. The increase in natural gas price has had a substantial impact on the cost of production of cement locally and going forward an increase of 3 per cent each year would further impact profitability. As per company disclosures, Oman Cement’s direct expenditure due to the gas price hike went up by OMR6 million in 2015 and for Raysut Cement, the cost escalation on account of the same was OMR5.3 million compared to the previous year.

Pricing pressure is expected to continue and there is limited probability for an improvement in realisations in the near term.